New tariffs reviving old trade discussion

Washing machines and solar panels are the latest products placed in the spotlight of an old debate about trade, with many economists saying new U.S tariffs are going to do more harm than good.

New developments hit close to home in Ohio, where appliance-maker Whirlpool is a major employer and the leading instigator of the new charges on goods from foreign competitors.

The local effects are less clear for solar panels. First Solar has a plant near Toledo, but solar systems are not a common household item.

Looking at the tariff on washing machines, a typical Ohioan is likely to be harmed more than helped because of increases in the cost of appliances, said Brent Campbell, an economist for Moody’s Analytics.

“The benefits are really concentrated, and the costs are more diffused across households because they’ll be paying more for manufactured goods,” he said.

Those benefits will be seen in Clyde, a city just south of Sandusky where Whirlpool employs about 3,200 people at a washing machine factory. That total includes 200 people that are in the process of being hired in anticipation of an increase in sales tied to the tariff, the company says.

In addition, financial benefits for Whirlpool will likely lead to an increase in job security for people who work in plants that make other products, such as the company’s dryer plant in Marion. The company has about 10,000 employees in the state.

Whirlpool helped to initiate the trade action by arguing that competitors such as Korea-based LG were violating trade laws by selling goods in the U.S. market at prices that undercut U.S.-based firms.

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The complaints took the form of litigation that has been in progress for years before last week’s tariff announcement from the Trump administration. Backers of the new tariffs say they are needed to help preserve U.S. manufacturing jobs.

“This is a victory for American workers and consumers alike,” said Jeff M. Fettig,Whirlpool’s chairman, in a statement issued last week.

The tariff is scheduled to last for three years, with maximum charges of 50 percent added to the wholesale prices of imported washing machines. Proceeds go to the federal government.

Looking at previous examples of tariffs, the increase in consumer prices is probably going to be much less than the amount of the tariff. LG has indicated that it will increase prices but has not said how much. Whirlpool also would have leeway to raise prices if competitors are doing so.

Meanwhile, the solar tariff is more complicated in its ramifications. It covers photovoltaic cells and modules, which are key components of solar arrays. Other components that are made in Ohio are not covered.

Some critics of the policy say the Trump administration is trying to stunt the growth of renewable energy. Others say it is designed to help one company, First Solar, which started in Ohio before moving headquarters to Arizona and has a plant in Perrysburg with about 800 employees.

A First Solar spokesman declined to comment.

The solar industry has grown in large part because the costs of modules have been declining. Foreign manufacturers have played a key role in in the cost-cutting.

The tariff likely means buyers of solar systems will need to pay more.

“It’s frustrating,” said Geoff Greenfield, founder and owner of Third Sun Solar in Athens, Ohio, which sells and installs solar systems at homes and businesses. “There are going to be job losses, particularly in the large, utility-scale projects” because of the tariff.

He employs about 50 people. He had planned to hire about 35 more this year to respond to high demand for services but thinks it will end up being about 25 because of the tariff.

The tariff tops out at 30 percent. Greenfield expects that to translate into an increase of about 5 percent in price quotes he makes to prospective customers.

For some perspective, he thinks there are a number of state-level policies that are more harmful to the solar industry than the tariff. At the top of the list is a 2014 law that got rid of requirements that utility companies buy a certain amount of renewable energy from in-state sources.